Breaking its nine-day slide -- the longest since 2007 -- the rupee turned around in style against the dollar to close at 67.33 after selling in the US currency by exporters accelerated.
The domestic unit rebounded from its 2-1/2 month low with an impressive 42 paise gain - its sharpest single-day jump in over two months.
Heavy selling in the greenback by exporters and banks amid its weakness against other currencies overseas and a spectacular rally in local equities supported the recovery momentum.
Suspected RBI intervention through state-owned banks also kept it cheery, a forex dealer said.
At the Interbank Foreign Exchange (Forex) market, the rupee resumed on a firm footing at 67.63 against its overnight close of 67.75 and maintained its rising trend to hit an intra-day high of 67.31 before settling at 67.33, a solid gain of 42 paise, or 0.62%.
Meanwhile, RBI fixed the reference rate for the dollar at 67.44 and euro at 75.20.
In cross-currency trades, the rupee bounced back against the pound sterling to end at 98.85 from 98.98 on Tuesday.
It also regained some ground against the euro and closed at 75.03 compared with 75.73 and recovered against the yen to settle at 61.13 per 100 yens as against 61.80 on Tuesday.